Best States to Buy an Established Business

The chance of a new business surviving 10 years or longer is just over 1-in-3, making entrepreneurship a high-risk endeavor. But with over 2 million American proprietors approaching retirement age, savvy younger investors may be better off buying an established business. 

The question is: where should they look? 

NationalBusinessCapital.com looked at state-level data to determine where a motivated young buyer might have the most success taking the reins of an established business from a veteran owner, taking into account growth potential, buying opportunities, and infrastructural considerations. In its inaugural Best States To Buy An Established Business report, researchers at the business lending platform found strong buying environments in every region of the country, but with quality varying greatly within each region. 

Are certain regions better than others? Not really, but they also aren’t equally suitable for every business strategy. For example, taking over a business in a rural and/or red state may have tax advantages and slightly better long-term survival odds, while an urban and/or blue state may offer better digital infrastructure and access to capital for those looking to hit the ground running and quickly expand. 

Consider your risk tolerance when buying. Are you looking for a fast-growing market or a captive one? Are you looking for a well-established institution or a promising idea that needs to be taken to the next level? The Midwest offers some of the best balance between costs, infrastructure, and innovation, led by Michigan (1st), along with Ohio (4th). Capital also tends to be available here, even if it’s not at the scale of venture capital hotspots on the coasts. The most polarized region in terms of buying opportunity was the South, with larger, richer states like Florida (2nd) and Texas (3rd) offering some of the best buying environments in the nation. On the other hand, poorer states like Arkansas (50th), Mississippi (49th), Louisiana (45th), and West Virginia (43rd) are some of the most challenging due to scarcity of capital and underdeveloped infrastructure. 

Key Findings

• Over 2 Million Businesses Are Run By Owners Age 55 Or Older: America’s small business owners are aging, offering many potential opportunities to buy an established business.
• The Average 10-year Survival Rate For A US Business Is 35.2%: Proprietors that opened a business in March 2014 had slightly better than a 1-in-3 chance of still being in business in 2024. Virginia had the lowest rate at 30.2%. Montana had the highest at 41%. Purchasing a time-tested business may help investors mitigate this risk.
• The Best States Were Regionally Diverse, The Worst Clustered In The South: Prospective buyers looking for a deal have their pick of most of the country’s regions, with competitive states on the West Coast, the Mountain West, Midwest, Northeast, and the South. However, 40% of the poorest performing states were in the South. Despite relatively low taxes, these states suffer from poor digital infrastructure, limited access to capital, and low patent filing rates. 
• Red States Make Up The Majority Of Both The Highest And Lowest Performers, Blue States Perform Slightly Better On Average: Red states accounted for 60% of the Top 10 and 70% of the Bottom 10, suggesting wildly different outcomes from conservative policy. Blue states had a slightly higher average score of 51.3 compared to 49.8 for red states, thanks to stronger digital infrastructure and SBA loan approval rates. However, red states had slightly higher average 10-year survival (35.7% vs. 34.3%) and GDP growth rates (5.6% vs. 5.3%). 

THE 10 BEST STATES TO BUY AN ESTABLISHED BUSINESS

1. Michigan

Score (out of 100): 75.1 (1st)

The Great Lakes State tops our list of best states in which to buy an established business, and by a significant margin. While it doesn’t dominate in any particular metric, Michigan has a number of things going for it, including a large number of business owners approaching retirement age (10th), strong recent GDP growth (8th), and a pretty innovative business sector (10th in patents per 100,000 people). Its overall tax burden is also low (5th, tied).

While Michigan wasn’t especially weak in any metric, a little over 10% of the state doesn’t have access to broadband (26th), which could be an issue for business strategies with a substantial online component.

2. Florida

Score: 70.7 (2nd)

As one might expect of one of America’s hottest retirement destinations, Florida has a large number of aging business owners (2nd) who could soon be looking to sell in a growing economy (11th, GDP growth) with no personal income taxes and a low overall tax burden (11th). Financing is also pretty easy to come by should you need some additional funding to acquire the business in question (10th).

Before you start packing your sunglasses and flip-flops, however, it’s worth noting that Florida’s businesses aren’t especially innovative (32nd, patents) and have a fairly high attrition rate over the long term (27th).

3. Texas

Score: 70.6 (3rd)

Breathing down Florida’s neck is the Lone Star State. While Texas also has a large number of 55+ business owners (3rd) and no personal income tax, it otherwise presents a very different set of advantages and risks. On the advantages side, Texas offers a lower overall tax burden (5th, tied), a more innovative environment (20th), and a less cutthroat economy (11th in 10-year survival rates). 

In terms of risks, financing is harder to come by (34th) and GDP growth (23rd), while still respectable, hasn’t been as high.

4. Ohio

Score: 70.3 (4th)

Ohio businesses rank among the most resilient in the nation, with just short of 38% still standing after 10 years (7th). It certainly doesn’t hurt that proprietors in the Buckeye State have better access to low-interest financing (5th) than most of its competitors. Opportunities to buy in Ohio should be plentiful as well, given its high number of aging owners (7th). 

That said, you’ll want to be sure the business you’re acquiring has a well-defined and profitable niche, as Ohio’s recent growth (23rd) and tax burden (24th) are just a hair above average.

5. Massachusetts

Score: 68.5 (5th)

If you have a good eye for the next big thing, you may want to take a look at buying a business in Massachusetts. The Bay State produces more patents per capita (2nd) than any state other than California, and you shouldn’t have too much trouble getting low-interest financing to support your purchase or operations (8th). It’s also a good base for an online company, with nearly 99% of the state having access to broadband (1st). 

Massachusetts is, of course, an expensive state to operate in (37th in overall tax burden), and recent GDP growth has lagged behind most of the country (39th).

6. Utah

Score: 66 (6th)

Utah has rapidly cultivated a reputation as a business-friendly state, with few others seeing as much GDP growth between 2023 and 2024 (0.74%, 3rd). Small businesses–and small business buyers–also enjoy some of the highest rates of SBA loan approvals (3rd). Perhaps less well-known is Utah’s above-average innovation (patents per capita, 12th) and broadband coverage (13th).

Before you pick up for Salt Lake City, just be aware that there may not be that many established businesses to choose from (31st in business owners over 55), and your total tax burden can be quite high (39th).

7. California

Score: 65 (7th)

While other states have made a small dent, California’s dominance in the innovation economy remains intact (1st in patents per capita), with strong broadband coverage despite its expansive size (8th). The Golden State should also provide ample buying opportunities, with the largest pool of business owners approaching retirement (1st). 

The main drawback to buying a business in California is its tax burden, which can take a substantial chunk out of your revenue (46th). And, despite its enormous economy, California has had more trouble than most states producing GDP gains post-pandemic (29th).

8. Colorado

Score: 63.5 (8th)

Colorado has a reputation for being one of the best states for entrepreneurs, with a competitive mix of relatively low tax burdens (19th) and access to capital (6th in SBA loan approvals), so it shouldn’t be a huge surprise to see it on this list as well. The Constitution State is full of innovative companies, producing patents at the 9th highest rate in the nation. And with almost 50,000 business owners approaching retirement (14th), there should be ample opportunities to purchase an established business.

So why doesn’t Colorado rank quite as high in this topic as it does in starting a business? Attrition rates (45th) are higher in Colorado than in most states at the 10-year mark. 

9. Pennsylvania 

Score:  62.9 (9th)

The Keystone State may be one of the more underrated states for small businesses, despite also being known for scrappy, innovative Philadelphia eateries. Over 83,000 Pennsylvania business owners are 55 or older (6th), which will likely provide a fertile field of buying opportunities. The state’s online infrastructure (12th in broadband) is strong, expanding the potential reach of its small businesses. 

While Pennsylvania didn’t do too poorly in any category, it’s worth noting that capital may be relatively hard to come by for a state of its size (30th).

10. Oregon

Score:  62.8 (10th)

Oregon rounds out the top 10 best states in which to buy an established business, largely on the strength of its high rate of patent generation (4th). It’s also seen strong YoY GDP growth (13th), suggesting the Beaver State’s post-COVID malaise may be over. Small businesses tend to be pretty resilient here, with over 36% making it over the 10-year line (18th). 

With the population of Oregon very unevenly distributed, though, you may find some rural businesses aren’t well-connected (30th in broadband). Tax burden is high as well (31st).

THE 10 WORST STATES TO BUY AN ESTABLISHED BUSINESS

41. Iowa

Score: 37.8 (out of 100)

Despite impressive business longevity (2nd), opportunities in Iowa may be limited (29th in owners 55+). Growth in the Hawkeye State has also been lagging (48th), and digital infrastructure is lacking in much of the state (43rd in broadband).

42. Maine

Score: 37.5

Maine businesses are durable (13th in 10-year survival rates) and well-funded (9th in SBA loan approvals), but things get worse from there. The state’s economic growth has been relatively sluggish (43rd), and opportunities to buy may be limited (40th in owners 55+). Tax burden is also significant (41st).

43. West Virginia

Score 36.5

Businesses in West Virginia have a pretty good chance of sticking around once they’re established (8th), but with limited digital infrastructure (49th), you’ll need to be sure you have a strong local market. 

44. Alabama

Score: 35.6

While Alabama puts in decent showings in survival rates (20th) and taxes (20th), there isn’t too much here to recommend thanks to poor innovation rates (46th, patents), digital infrastructure (47th), and access to capital (49th, SBA loan approval rate).

45. Hawaii

Score: 32.4, tied

Hawaii is well-wired (11th, broadband), but the remote islands aren’t a particularly easy place to do business. High tax burdens (48th) and liquidity (37th, SBA loan approvals) put some headwinds on state businesses, and with fewer than 10,000 business owners approaching retirement (43th) there may not be that many opportunities to buy in the first place.

45. Louisiana

Score: 32.4, tied

Tied with Hawaii at 45th, Louisiana is burdened with relatively slow GPD growth (42nd) as well as poor rates of innovation (47th) and infrastructural issues (41st in broadband; 44th in SBA loan approvals). Tax burdens are on the low side, however (11th)

47. Alaska

Score: 32

You won’t find much of the latest in digital infrastructure in the tundra (50th, broadband) or much of a culture of innovation (49th in patent per 100k) to plunder, but businesses that get a foothold in the Last Frontier tend to stick around (6th in 10-year survival rates). Finding someone who is selling may be an issue, though, with under 6,000 business owners approaching retirement (50th).

48. New Mexico

Score: 29

Unless your business plans involve Hatch chiles, you’ll probably want to take a pass on New Mexico. Long-term business survival rates are the second lowest in the nation at less than 31%, which may have something to do with the difficulty of accessing capital (42nd in SBA approval rates) in the Land of Enchantment.

49. Mississippi

Score: 27.4

Mississippi didn’t have a strong showing in any category, though its survival rates (21st) and tax burden aren’t bad (20th). But “not bad” can’t make up for its lack of innovation (50th), poor digital infrastructure (45th, broadband), and lack of access to capital (46th, SBA approval rates).

50. Arkansas

Score: 23.8

Finishing in last place by a significant margin is Arkansas. The state’s average tax burden (25th) isn’t enough to offset the lack of capital (50th in SBA approvals) or the sluggish economic growth (47th), relatively speaking. And with digital infrastructure lagging (38th, broadband) and innovation (44th) lagging, there may not be much reason to sift through the relatively low number of businesses that may be up for sale in the near future (34th in business owners over 55). 

COMPLETE RANKING OF ALL 50 STATES

Methodology

To create our rankings, we collected metrics related to efficiency for each of the 50 states. We then ranked each of the states within each metric. Each metric was then assigned a weight. Scores within each metric were then aggregated and normalized to give each state an overall score between 0 and 100. States receiving the highest scores out of 100 were ranked the least efficient. 

The seven metrics we chose, along with their weights, were:

• Business Owners 55+ (15%): This metric represents the number of business owners aged 55 and over. It serves as a rough gauge of how easy it will be to find an established business for sale in the near future within the state. Data is sourced from the US Census’s 2022 Annual Business Survey.
• GDP Growth By State (15%): This metric represents year-over-year GDP growth within the state between Q2 of 2023 and Q2 of 2024. It serves as a measure of how quickly the state’s economy is growing. Data is sourced from the Bureau of Economic Analysis.
• Patents Filed Per 100,000 Residents (13%): This metric is the number of patents filed within the state, divided by the state’s population, and multiplied by 100,000. It serves as an indicator of innovation and potential unique buying opportunities within the state. Data is sourced from the US Patent and Trademark Office.
• Survival Rates (15%): This metric is the 10-year survival rate for businesses within the state from March 2014 to March 2024. This metric represents how hard it is to sustain a business in the state over the long term. Data is drawn from the US Bureau of Labor Statistics Establishment Age and Survival Data. 
• Broadband Access (14%): This is the percentage of the state’s population that has access to wired or fixed wireless broadband internet. Access to strong digital infrastructure helps businesses reach markets outside of their local area as well as be able to reliably access SaaS tools. Data is sourced from BroadbandNow. 
• SBA Loan Approval Per 100,000 residents (14%): This metric is the number of SBA 7(a) and 504 loan approvals in the state in 2024, divided by the state’s population, then multiplied by 100,000. It serves as a gauge of how easy it is for small businesses within the state to get low-interest business loans. Data is sourced from the Small Business Administration Lender Reports.
• Tax Burden (14%): This metric is the calculated state and local tax burden within the state. Data is sourced from the Tax Foundation.